Austin Independent School District Superintendent Matias Segura hears public comment during a school board meeting on Thursday, June 11, 2026. KAYLEE GREENLEE FOR AUSTIN CURRENT
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The Austin school financial crisis reached a new low Thursday as district leaders revealed the school system is now projected to close the year with a $95 million year-end deficit, a shortfall $76 million deeper expected, and one that will drain the district’s financial reserves to half their usual level.

The new deficit marks the latest and most severe turn in a financial crisis that has already led Austin ISD to close schools, pursue controversial property sales and propose sweeping cuts to jobs and student services. Now, the district’s shrinking reserves — its primary financial cushion between uneven tax collections and payroll obligations — have become a central concern as trustees weigh how much deeper to cut.

Austin ISD has historically maintained a 20% fund balance, a reserve intended to stabilize cash flow and reduce the need for short-term borrowing. Trustees temporarily lowered that target to 15% through 2027 as the district’s finances deteriorated. But with reserves now projected to fall to just 10%, at $137 million, district leaders said they now anticipate needing another loan in September to meet payroll, following a $19 million loan last year.

“I want to acknowledge the pain that our community, that our staff, that everybody in the city is feeling as we navigate these very critical budget challenges and decisions,” Superintendent Matias Segura said. “We have been working very hard as a system to move the needle and one of the things that often is challenging when you go through this kind of work is that it feels very much like the goal moves, like the target moves.”

Caught off guard

Segura said the district didn’t fully understand how deep the deficit would grow until the final weeks of school, when enrollment and attendance figures came into clearer focus.

The revised numbers appeared to catch some board members off guard, with several questioning how they could vote on a budget just days after receiving the proposal and with the district now projecting reserves below board policy. Trustees also requested more detailed information about the cuts and discussed whether to delay next week’s vote until June 25 or amend the budget in August.

“I am trying to understand how this happened so it can inform what we do moving forward,” said board President Lynn Boswell.

Trustee Arati Singh said she was concerned about the district falling below its own board reserve policy and urged board members to have a broader conversation about what financial risks they were willing to accept before next week’s vote. Singh said she would rather consider additional school closures than make deeper cuts to departments that directly affect students.

“What is important to me is not that we have a pretty budget, but an accurate budget,” Singh said. “I don’t think there is any room for optimism.”

On the chopping block

The announcement came as trustees prepared to debate a proposed budget for next school year that would cut over 280 positions, including dozens of currently-filled special education jobs, while scaling back bus stops, resources for deaf and hard-of-hearing students, some arts programs and reducing some athletic program funding, including to water polo. Segura said partnerships were being explored to continue some programs while reducing costs.

Of the 280 proposed position cuts, district documents show 90 are currently filled while the rest are vacant jobs that will remain unfilled. District leaders also said they cut $17 million from the district’s central office this week, including numerous positions, as part of a broader effort to reduce spending across the system.

Proposed cuts at division and department level show the breadth of those reductions compared to last year’s funding:

  • more than $4 million less for district police,
  • more than $12 million less for transportation,
  • more than $2 million less for counseling and mental health,
  • $2 million less for student support services, and
  • more than $2 million overall for special education

Segura said some division- and department-level cuts reflected the combination or collapsing of one of these into another division or department.

District leaders said the reductions were necessary as Austin ISD closes the 2025-26 school year with far less in its operating fund than planned and a proposed budget that relies on $60 million in property sales or leases to avoid a deep deficit next year.

District leaders attributed the deeper deficit to a series of compounding setbacks:

  • more than $26 million in missed funding from declining enrollment and attendance,
  • $15 million in unspecified additional expenses, and
  • nearly $30 million in expected revenue from property sales of the former Rosedale and Brooke school properties that did not materialize as expected.

The district has leaned on those property sales to help stabilize its budget, even as some deals have stalled or faced community opposition. Earlier this spring, district leaders warned the district was already facing a deficit approaching $50 million before Thursday’s revised figures made the gap even greater. In total, the district could face a budget hole as big as $181 million or greater if the district doesn’t make cuts or lower its reserves.

Dozens watch a livestream as the Austin Independent School District convenes from an overflow section in the lobby of the AISD building in Austin, Texas, on June 11, 2026. KAYLEE GREENLEE FOR AUSTIN CURRENT

Parents, staff push back

Dozens of students, parents and employees packed district headquarters, chanting in opposition to the proposed cuts on their way in and filling the boardroom and adjacent hallway.

During public testimony, students, parents and staff, including some employees who received letters informing them their positions would be changed or eliminated, urged board members to preserve librarians, community programs, water polo, bus routes and special education services.

“If I am expected to drive them anyways, I might as well drive them to Eanes ISD or a charter school,” said Austin ISD mom Katrina Kincaid, whose 13- and 15-year-old children will be affected by cuts to bus routes, during public testimony.

Several parents also advocated for trustees not to renew Segura’s contract, which was up for discussion Thursday, arguing district leadership had failed to protect classrooms while the budget crisis deepened.

“Four of you will not be on the board next year, you will not have to course correct if this goes wrong,” Paulette Woodfin, a community member, said during public testimony. “The next board elected by this community deserves the ability to make the decision on whether to extend his contract.”

Acacia Coronado is Austin Current's education reporter. She is a Texas native and has previously written for The Associated Press, The Texas Tribune and The Wall Street Journal, among others.